The Up Side of Down

Why Failing Well is the Key to Success, Megan McArdle, Viking.

Sarah BrodskyFeb 09, 2014

Journalist Megan McArdle has experienced her share of significant failures. As she recounts in “The Up Side of Down,” she clung to a collapsed relationship for months, unable to accept that she’d wasted her prime dating years on a man who wasn’t going to marry her. And a fruitless job search left her doing administrative work in a trailer while making payments on her business school loans. So McArdle, who is now happily married and employed in a field she loves, knows what it takes to recover from failure—and she backs up her advice with research showing that public policy and culture can help people turn themselves around.

McArdle traces cultural attitudes to failure back to differences between hunter-gatherers and farmers. Hunter-gatherers forgive failure easily. They must, as hunter-gatherers can scour a forest for prey and still return home empty-handed if they aren’t lucky enough to cross paths with an animal. Thus, survival requires that successful hunters share meat with those who failed to catch anything (often through no fault of their own). When a community transitions to agriculture, though, that lax approach is disastrous because inadequate sanctions for shirking mean people play hooky from the fields. Thus, agrarian societies emphasize individual responsibility and insist that those who neglect their crops suffer the penalty of meager or nonexistent harvests. McArdle explains that modern economies are more like hunter-gatherer societies in terms of the uncertain connection between effort and reward. No one can tell for sure if a new product will take off or flop. Accordingly, she argues that gentle policies toward failed risk-takers, such as the option to declare bankruptcy and start over, encourage industriousness and enterprise.

Much of the book addresses institutions like schools, hospitals, and the criminal justice system, but there’s a lot that’s valuable for individuals. An example is the chapter on joblessness, an especially conspicuous economic and personal failure. McArdle recommends that unemployed workers follow procedures that are favored by door-to-door salesmen, including writing a script and recording attempts. People who stick to her prescriptions will be more likely to persist in the face of rejection, giving them a better chance of reaching an exit in what McArdle describes as the “dark room” of unemployment.

McArdle’s treatment of overcoming failure and minimizing the resulting disruptions is exceptional, so it’s slightly disappointing that she gives less attention to a possible causal link between failure and achievement. She concludes that her previous failure to find a job is what allowed her current professional success to happen, but she doesn’t really explain the mechanism that parlays failure into a fulfilling career. Suppose you respond to failure optimally; why doesn’t that just bring your life back to normal, to the status quo before you failed? McArdle suggests that her failure gave her the courage to seize opportunities she wouldn’t have considered previously. While that may account for her case, it falls short as a general theory. Some serial entrepreneurs are daring from the get-go, and surely an engineer testing product iterations gains more than bravery (or the purely negative knowledge of what not to do) along the way.

However, that’s a small oversight in a book brimming with sound guidance for improving the regulatory climate, education, financial culture, and more. Failures are everywhere, and past success doesn’t confer immunity; even entrepreneurs who have built prosperous companies have a high chance of failing with a new venture. That’s why it’s crucial to prepare to fail well and why risk-takers from hunter-gatherers to CEOs should heed McArdle’s advice.